1 & 2

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1. Chapter 11 (12 questions) 1. Dick Marcus invests in individual stocks through TD Ameritrade as well much more in mutual funds with Vanguard and Fidelity. His TD Ameritrade stock portfolio of individual stocks currently is: Stocks in Portfolio Expected Portfolio Weights Returns Microsoft 30% 13% Costco 20% 9% BlackRock 20% 11% Visa 20% 8% Badger Meter 10% 14% 100% Calculate Prof. Marcus' expected portfolio return. a. 12.1% b. 10.9% 11.9% d. 9.9% C. 2. Consider the following information: Rate of Return if State 50 50 Occurs Probability of State of State Stock Stock Stock Economy of Economy Boom 0.8 0.11 0.14 0.20 Bust 0.2 0.04 0.08 -0.06 What is the expected return on an equally weighted portfolio of these three stocks? a. 11.1% b. 13.2% c. 13.5% d. 12.4%